Google's chairman last night provoked outrage when he defended the company’s low tax bill by saying it has plenty of British staff who pay their taxes.
Last year the internet giant paid just £7.3million in corporation tax on more than £3billion UK sales.
But in an extraordinary interview, chairman Eric Schmidt said the American company helped the economy in other ways, selling online ads and hiring staff who pay income tax.
‘We empower literally billions of pounds of start-ups through our advertising network and so forth,’ he said. ‘We also hire more than 2,000 employees.’
He added: ‘The people we employ in Britain are certainly paying British taxes.’
Google was branded ‘a parasite’ for leaving small businesses to pick up the tab for its tax avoidance.
Entrepreneur Luke Johnson, former chairman of the Pizza Express restaurant chain, said: ‘My companies employ perhaps five times as many staff in Britain as Google and pay far higher rates of corporation tax.’
Mr Johnson, who runs investment group Risk Capital Partners, added: ‘They do not make an appropriate contribution and are a parasite.’
Margaret Hodge, the Labour MP who chairs the Commons Public Accounts Committee, said: ‘I just think it is completely, utterly and totally wrong a global company can be so relaxed about engaging in economic activity in a country and making a profit and feeling no responsibility to pay its fair share of tax.’
Anger: Web giant Google avoided paying $2billion in tax last year by moving around 80 per cent of its overseas profits to a company in the tax haven of Bermuda
Last year Google was slammed by MPs as ‘immoral’ for its tax-dodging, alongside Amazon and Starbucks.
A customer boycott of Starbucks shamed the coffee chain into paying £20million to HMRC. Google has not offered any additional payments.
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Asked if he was worried about a boycott, Mr Schmidt said: ‘We worry about everything at Google.’
At the weekend George Osborne said he wants to focus on tax reform in Britain’s G8 presidency this year.
Google paid just £7.3million in corporation tax last year on UK sales of £3.1billion. It did so by reporting small profits in the UK, funnelling the rest of the money to Ireland and then into the tax haven of Bermuda.
Under fire: Other companies like Amazon and Starbucks have also been criticised over their tax affairs in the UK
Starbucks has more than 700 outlets in the UK generating revenues of more than £3billion but it paid just £8.6million in corporation tax in its 14 years of trading in the UK and nothing in the last three
In January the Daily Mail revealed Google pushed more than £6billion into Bermuda, costing global governments at least £1billion in lost tax.
Experts say this shaves more than £200million from its UK tax bill.
But Mr Schmidt yesterday shrugged off the claims in a BBC interview.
‘These are the way taxes are done globally,’ he said, speaking on The World at One.
‘We fully comply with the law and obviously, should the law change, we’ll comply with that as well.’
But he admitted that Britain was a ‘very, very good business environment for us’.
The company employs around 2,000 employees in the UK.